Employee performance awards are widely used to foster better employer-employee relations by recognizing the efforts and accomplishments of employees. In many instances, rather than provide cash bonuses, employers award incentive points to their employees. The incentive points are accumulated over a period of time by the employees and then redeemed for valuable gifts displayed in a catalog.
The catalog-based incentive points redemption programs are indeed a nice way for companies to reward their employees. The fact that the redemption catalogs typically have discretionary items such as stereos, televisions, sporting equipment, etc.—as opposed to non-discretionary staple items—ensures that users view the program as a reward rather than mere compensation for their work. However, the act of selecting a product from a catalog itself lacks excitement.
On the other hand, auctions evoke excitement. Auctions do not occur every day. Auctions are noted events placed upon calendars. Auctions are viewed with anticipation by participants. Since everyone values items differently, there is always the possibility that a participant will come away from an auction with an item at a price much lower than the participant would have paid at the store or in a catalog. An auction also introduces the opportunity for a participant to obtain an item at a price that the participant is willing to pay—a price much lower than the item sells for in a retail store or catalog. Finally, there is the adrenaline inducing competitive atmosphere created by auctions. Even if a participant obtains an auction item for the same number of points as would have been used if the participant obtained the same item from a catalog, the excitement of the bidding process itself, and prevailing in a bidding competition, provides a bonus to the prevailing bidder.